Mahathir and Anwar: PM keeps a tight grip on reins of power

From the Bangkok Post, 22 October, 1997

The past few months might have shaken the self-satisfaction of
Malaysia's long-serving prime minister, but he has given no indication
he is ready yet to make way for his deputy.

Kuala Lumpur -

What a tumultuous period this past six months has been for Prime
Minister Mahathir Mohamad. When he left the country for a two-month
working holiday in May, Malaysia was one of the world's fastest
growing economies and a shining example for all developing nations.
When he came back, he was greeted with a plummeting ringgit and a
stock market that would soon rank among the worst performing in the
world.

Malaysian and international investors alike expected the seasoned
prime minister to steer the country back on course. A series of verbal
attacks on speculators and several policy mistakes later, talk is rife
about whether he is still fit to lead the country.

The western press has had a field day, pointing out his various
blunders and touting his deputy, Anwar Ibrahim, as the new and better
man for the job. However, the 72-year-old prime minister still has the
loyalty of all the component parties in his ruling coalition, Barisan
Nasional (National Front). Even opposition party PAS (Pan-Malaysian
Islamic Party) has thrown in its support for his leadership.

Although there has been some grumbling among the corporate upper
class - some billionaires have reportedly been reduced to millionaires
because of crumbling share prices - Dr Mahathir is still wildly
popular among the common folk.

True, the ringgit is 25 percent weaker against the dollar and the
stock market has lost some 300 million ringgit (33.9 billion baht) in
market capitalisation. But those who have been hurt most are the upper
class. People who own stocks and who buy imported luxury goods. And,
although they might criticise Dr Mahathir privately for some recent
misguided policies, they know that it was he who made it possible for
them to make it big in the first place.

In his 16 years as prime minister, Dr Mahathir has transformed
Malaysia from an agricultural producer into a manufacturing
powerhouse. Many still believe, even after all that has transpired,
that if anyone can pull Malaysia out of the doldrums, it is Dr
Mahathir. Among Southeast Asia's current leaders, Dr Mahathir is the
only one who has fought a recession (in the mid-1980s) and won
convincingly.

Explains one political analyst: the foreign press doesn't matter to
the grassroots. The average folk don't have access to foreign
newspapers or news wires. The largely compliant and supportive local
press has been singing his praises, even as the foreign press wreak
havoc on his credibility.

Besides, many of the ethnic Chinese and Indians in Malaysia still do
not trust Mr Anwar, a former Islamic firebrand who was once jailed for
his beliefs under the Internal Security Act.

It was under Mr Anwar's watch (as acting prime minister in Dr
Mahathir's absence) that three women taking part in a beauty contest
were arrested by officials from Selangor state's Islamic Affairs
Department. The women, all Malay, made history by becoming the first
Malaysians to be charged and fined for indecent exposure in a beauty
contest. Upon his return, Dr Mahathir lambasted Islamic officials for
abusing "the little powers" that they have.

Barely two weeks after the girls were arrested, government officials
suddenly announced that an "Islamic Civilisation" course would be made
compulsory for all university students irrespective of race or
religion. The non-Muslim community was outraged, with opposition
member of parliament Lim Guan Eng saying that the Chinese community
saw it as an attempt to impose Islamic values on non-Muslims.
"Mahathir would have taken a tougher stand against perceived acts of
religious extremism," said Mr Lim.

Mr Lim points out that while Dr Mahathir has made some terrible
mistakes lately, Mr Anwar has had his fair share of policy blunders as
well. "As finance minister, he has to share the responsibility and
burden for what has happened to our economy." This is something the
foreign press has either overlooked or chosen to ignore, said Mr Lim.

It was during Mr Anwar's acting premiership that the nation's central
bank, Bank Negara, spent billions of ringgit (reportedly up to 9
billion [108 billion baht at yesterday's rate]) in a vain effort to
fight off speculators And, this was done when the ringgit was still at
a comfortable level of around 2.55 against the dollar.

"Bank Negara's attempts at defending the ringgit was a big mistake. It
should have let the ringgit find its own value," said the executive
director of a leading local economic think tank who asked not to be
named.

Last week Mr Anwar announced the 1998 budget - an instrument regarded
by analysts and investors as the clearest indicator yet of Malaysia's
willingness to address weaknesses in its economic fundamentals.
Analysts have called it a lacklustre budget. Many said the measures
were not nearly as tough as they had hoped.

Although the budget speech was delivered during the last hour of
trading on Friday, the market reacted quickly sending the benchmark
Kuala Lumpur Composite Index down 7.22 points to 794.80 points. The
currency market suffered as well, with the ringgit ending Asian
trading down 3.2750 from the previous day's close of 3.1770.

Although Mr Anwar has proven to be the voice of reason over the past
few months, there are those who still have more faith in Dr Mahathir's
ability to run the economy.

The Japanese, who consider Dr Mahathir an ally, are uncertain about
how things would be like for them under Mr Anwar's administration.
"Take the Multimedia Super Corridor (MSC), for example. We have no
idea how committed he is to this concept," said a Japanese analyst
working for a local securities firm.

The MSC is a 15km by 50km information technology zone aimed at
leapfrogging Malaysia into the information age. Like many other
ambitious projects, it was Dr Mahathir's brainchild.

"The basic difference between the two leaders is that Mahathir is a
capitalist while Anwar is a social activist," said the analyst. "From
a business point of view, we are more comfortable with Mahathir."

The analyst added that they were not even sure that Malaysia's "Look
East" policy, initiated by Dr Mahathir shortly after he assumed power
in 1981 and designed to win economic assistance from Japan, would go
on after he leaves office.

However, Dr Mahathir has given no indication to date that he will
resign any time soon. In fact, a senior Japanese adviser close to Dr
Mahathir said that it looks like he will go on past 1999, if his
health permits.

Dr Mahathir's party, the United Malay National Organisation (UMNO),
the leading component in the coalition government, will hold its next
election in 1999. Dr Mahathir is prime minister by virtue of the fact
that he is the UMNO president.

The big question on everybody's mind lately is, will Anwar, who has
played second fiddle for so long, mount a leadership challenge to Dr
Mahathir in 1999?

Nobody knows for sure but analysts say if he does, he will be taking a
big risk as Dr Mahathir has proven time and again that he has staying
power. Dr Mahathir has endured and overcome a host of bitter battles
against diverse forces such as the judiciary, the sultans, and the
once popular Tengku Razaleigh Hamzah, a former finance minister who
currently holds no cabinet position.

"There is a long list of people who had fought against Mahathir and
lost. I'm sure Anwar has that list in the back of his mind," said Mr
Lim.